The European Union Should Listen to Its Citizens

Questions of
sovereignty in the EU have moved from the theoretical realm to
the street. People in Greece and other distressed countries are
asking by what right foreign governments are demanding higher
taxes, stripped-down public services and lower living standards.
The current financial emergency isn't just a sovereign-debt
crisis but also an EU constitutional crisis.

You see the problem. At a time when many of Europe's voters
are blaming EU institutions -- and the euro in particular -- for
their economic plight, they are unlikely to welcome a further
transfer of political power from national capitals to the
center. They think that this shift has already gone too far and
needs to be reversed. Yet some further surrender of fiscal
sovereignty must be part of any long-term plan to mend the euro
system.

The problem is real, but not as insoluble as you might
think. Curbs on public borrowing, as long as the issue of short-
term flexibility can be dealt with, infringe on fiscal
sovereignty in a relatively benign way...

Nonetheless, popular concerns about the drift of political
power from Europe's nations to the EU's center are well-founded.
New demands for central supervision must therefore be combined
with a reversal of centrism in other areas. From now on, Europe
should ask governments to surrender sovereignty only when
strictly necessary. Starting now, voters must be talked to and
heeded. Where integration has gone further than is necessary or
wanted by voters, it should be rolled back.

You might say this is little to ask. In fact it will
represent a wholly new approach.

My previous column argued among other things that an orderly dismantling of the eurozone was almost impossible to imagine. A reader referred me to an article in the FT that I had missed which develops this point at greater length: Greek default within the euro is the only real option. It's by Robert Jenkins, an external member of the Bank of England's financial policy committee (writing in a personal capacity). Those who think it's time to start thinning out the eurozone should read it. Jenkins describes a six-step process. The last step is this:

6. Bank lending across the EU ceases. Economic activity halts.

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